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Does the Granary County Subsidy Program Lead to manipulation of grain production data in China?

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  • Zhang, Xiaoheng
  • Yu, Xiaohua
  • You, Liangzhi

Abstract

Manipulation of food production data could lead to catastrophic social and economic consequences. The accuracy of official agricultural statistics has long been questioned in China. This paper studies the linkage between agricultural production data manipulation and the Granary County Subsidy Program (GCSP). Since 2005, Chinese government gave subsidies to those counties with five-year average grain production between 1998 and 2002 more than 200 thousand tons to encourage these local governments to give priority to grain production. The prospective counties with grain production slightly below the threshold may have incentives to over-report their grain production. Based on the McCrary (2008)'s density test, this paper provides suggestive evidence of over-reporting grain production caused by the GCSP in 2005, 2006 and 2008, though the over-reporting rates are only 3%, 2%, and 1.7% respectively. The policy implication would be that fiscal distribution rules of a central government should avoid data manipulation incentives in local governments, particularly should cut the linkage to the data which are self-reported by the local governments.

Suggested Citation

  • Zhang, Xiaoheng & Yu, Xiaohua & You, Liangzhi, 2020. "Does the Granary County Subsidy Program Lead to manipulation of grain production data in China?," China Economic Review, Elsevier, vol. 62(C).
    • Handle: RePEc:eee:chieco:v:62:y:2020:i:c:s1043951x19301087
    DOI: 10.1016/j.chieco.2019.101347
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    1. Meng Meng & Leng Yu & Xiaohua Yu, 2024. "Machinery structure, machinery subsidies, and agricultural productivity: Evidence from China," Agricultural Economics, International Association of Agricultural Economists, vol. 55(2), pages 223-246, March.

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    More about this item

    Keywords

    The Granary County Subsidy Program; Grain production; Data manipulation; McCrary (2008)'s density test; China;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

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